condensed interim consolidated financial …august 31, 2015 . imperus technologies corp. 2 see...

Imperus Technologies Corp. (Formerly Isis Lab Corporation and Wedona Capital Inc.)

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2015 and 2014

(unaudited)

(In Canadian dollars)

1

MANAGEMENT RESPONSIBILITY STATEMENT

The management of Imperus Technologies Corp. is responsible for preparing the condensed interim consolidated financial statements, the notes to the condensed interim consolidated financial statements and other financial information contained in this interim report. Management prepares the condensed interim consolidated financial statements in accordance with International Financial Reporting Standards. The condensed interim consolidated financial statements are considered by management to present fairly the company's financial position and results of operations. Imperus Technologies Corp., in fulfilling its responsibilities, has developed and maintains a system of internal accounting controls designed to provide reasonable assurance that management assets are safeguarded from loss or unauthorized use, and that the records are reliable for preparing the condensed interim consolidated financial statements. President and CEO August 31, 2015

Imperus Technologies Corp.

2 See accompanying notes to these

condensed interim consolidated financial statements.

Approved on behalf of the board:

Daniel Kajouii Tito Gandhi

Director Director

(Unaudited)

in Canadian Dollars

June 30, December 31,

Note 2015 2014

CURRENT ASSETS

Cash and cash equivalents 9,106,455$ 26,326$

Accounts receivable 8 1,486,122 160,000

Tax credits receivable 568,196 428,608

Income tax receivable 579,757 -

Prepaid expenses and other receivables 6 3,946,044 509,691

Unbilled revenue 7 29,976 100,393

15,716,550 1,225,018

Note receivable 8 - 707,870

Equipment 9 230,867 159,522

Unallocated purchase price 5, 10 91,138,603 1,128,278

Intangibles 11 2,585,803 2,343,757

Deferred income tax assets 684,051 -

110,355,874$ 5,564,445$

CURRENT LIABILITIES

Accounts payable and accrued liabilities 12 3,230,274$ 1,915,082$

Bank loans 13 - 78,250

Debentures payable 14 864,319 2,501,737

Current portion of long-term debt 15 6,922,181 -

Current portion of loan payable 16 1,873,500 -

12,890,274 4,495,069

Long-term debt 15 19,847,674 254,737

Loan payable 16 40,477,475 -

Employee benefits payable 17 91,834 -

73,307,257 4,749,806

Share capital 18 45,877,405 13,840,778

Warrants 19 13,135,258 1,111,113

Options 20 3,362,190 1,158,480

Contributed surplus 397,635 157,947

Accumulated other comprehensive income (4,275) -

Deficit (25,719,596) (15,453,679)

37,048,617 814,639

110,355,874$ 5,564,445$

Nature of operations 1

Commitments 23

SHAREHOLDERS' EQUITY

LIABILITIES

ASSETS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION




Certain comparative figures have been reclassified to conform to the presentation in the current year.

For the three and six months ended June 30, 2015 and 2014

(Unaudited)

in Canadian Dollars

June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014

REVENUE Note

Game revenue 5,881,742$ -$ 9,778,195$ -$

Software and royalties 87,759 - 112,431 -

Service fees 30,000 30,000 60,000 60,000

License fees 15,000 15,000 30,000 30,000

Interest income 10,264 24,849 26,927 44,582

6,024,765 69,849 10,007,553 134,582

EXPENSES

Gaming commissions 1,611,559 - 2,904,463 -

Advertising and marketing 2,206,502 385,726 3,034,224 593,183

Salaries and benefits 1,122,284 157,588 1,978,258 295,718

Professional fees 213,014 67,450 407,206 159,325

Subcontractors 228,518 450,751 544,017 756,080

General and administration 398,173 98,425 706,377 196,101

Regulatory fees and investor relations 37,546 29,037 77,401 57,349

Travel and accommodation 57,385 73,536 102,294 171,554

5,874,981 1,262,513 9,754,240 2,229,310

149,784 (1,192,664) 253,313 (2,094,728)

Due diligence and transaction costs 1,017,669 - 1,419,991 - Depreciation of equipment 9 33,216 3,201 50,166 6,391

Amortization of intangibles 11 151,579 128,806 289,473 245,205

Stock-based compensation 20 2,428,881 112,999 2,443,398 371,692

3,631,345 245,006 4,203,028 623,288

OPERATING LOSS (3,481,561) (1,437,670) (3,949,715) (2,718,016)

OTHER CHARGES

Interest and accretion 16 2,141,541 2,372 3,669,972 3,188

Changes in value of long-term debt 15 1,913,398 - 2,587,511 -

Foreign exchange (gain) (992,177) (33,697) (1,181,579) (73,409)

Impairment charge 8 1,010,410 - 1,010,410 -

4,073,172 (31,325) 6,086,314 (70,221)

LOSS BEFORE INCOME TAX (7,554,733) (1,406,345) (10,036,029) (2,647,795)

Income taxes

Current 284,669 - 284,669 -

Long-Term (424,028) - (54,781) -

NET LOSS FOR THE PERIOD (7,415,374) (1,406,345) (10,265,917) (2,647,795)

OTHER COMPREHENSIVE LOSS

Item that may be subsequently reclassified to profit or loss:

Exchange differences on translation of foreign operations 28,480 - 4,275 -

(7,443,854)$ (1,406,345)$ (10,270,192)$ (2,647,795)$

Basic and diluted loss per share ($0.05) ($0.03) ($0.07) ($0.05)

Weighted average number of shares 160,879,299 54,774,885 144,361,416 54,774,885

For the Three Months Ended For the Six Months Ended

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

OPERATING LOSS BEFORE Due diligence and transaction

costs, Depreciation of equipment, Amortization of intangibles

and Stock-based compensation




Certain comparative figures have been reclassified to conform to the presentation in the current year.

For the Six Months Ended June 30, 2015 and 2014

(Unaudited)

in Canadian Dollars

June 30, 2015 June 30, 2014

Operating Activities Note

Net (loss) for the period (10,265,917)$ (2,647,795)$

Adjustments for:

Depreciation of equipment 50,166 6,391

Amortization of intangibles 289,473 245,205

Stock-based compensation 2,443,398 371,692

Accretion and change in value of long-term debt 3,510,353 -

Prepaid interest accretion 2,542,200 -

Unrealized foreign exchange (1,117,251) -

Impairment charge 1,010,410 -

Accrual of interest income (34,900) (28,878)

Accrual of interest on debentures - 1,249

Deferred income taxes (40,171) -

Employee benefits 10,656 -

(1,601,583) (2,052,136)

Change in working capital items:

Accounts receivable (224,563) (51,034)

Prepaid and other receivables 122,727 137,990

Unbilled revenue 70,417 -

Accounts payable and accrued liabilities (1,877,612) (396,813)

Income taxes receivable (355,172) -

Income tax credits receivable (139,588) -

(4,005,374) (2,361,993)

Investing Activities

Purchase of equipment (6,981) (38,569)

Increase in note receivable - (222,932)

Investment in intangibles (531,519) (406,482)

Net cash paid from Diwip acquisition 5 (48,871,016) -

(49,409,516) (667,983)

Financing Activities

Repayment of bank loan 13 (78,250) -

Issuance of share capital 18 24,725,575 566,833

Share issuance costs 18 (1,643,535) -

Proceeds from exercise of warrants 18 285,514 -

Issuance of debentures 14 - 1,000,000

Repayment of debentures 14 (1,797,925) -

Proceeds of debt issuance 16 41,003,640 -

62,495,019 1,566,833

Increase (decrease) in cash and cash equivalents 9,080,129 (1,463,143)

Cash and cash equivalents, beginning of the period 26,326 2,961,722

Cash and cash equivalents, end of the period 9,106,455$ 1,498,579$

For the Six Months Ended

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Six Months Ended June 30, 2015 and 2014

(Unaudited)

in Canadian Dollars

Contributed

Other

Comprehensive

Number of shares Share Capital Warrants Options Surplus Income Deficit Total

December 31, 2014 58,856,323 13,840,778$ 1,111,113$ 1,158,480$ 157,947$ -$ (15,453,679)$ 814,639$

Issuance of shares 70,644,500 24,725,575 - - - - - 24,725,575

Cost of issue - (2,722,277) 1,078,742 - - - - (1,643,535)

Issuance of shares related to Vast acquisition 106,608 38,912 - - - - - 38,912

Issuance of shares related to Diwip acquisition 30,558,280 15,890,306 - - - - - 15,890,306

Issuance of warrants on financing - (6,273,231) 6,273,231 - - - - -

Issuance of warrants - - 4,764,000 - - - - 4,764,000

Exercise of warrants 757,670 430,707 (145,193) - - - - 285,514

Warrants issued on exercise of broker options - (53,365) 53,365 - - - - -

Stock-based compensation - - - 2,443,398 - - - 2,443,398

Cancellation/expiry of stock options - - - (239,688) 239,688 - - -

Translation loss on Diwip - - - - - (4,275) - (4,275)

Net loss for the period - - - - - - (10,265,917) (10,265,917)

June 30, 2015 160,923,381 45,877,405$ 13,135,258$ 3,362,190$ 397,635$ (4,275)$ (25,719,596)$ 37,048,617$

December 31, 2013 53,689,860 11,526,654$ 1,305,513$ 756,188$ -$ -$ (8,382,095)$ 5,206,260$

Stock-based compensation - - - 371,692 - - - 371,692

Exercise of options 40,000 11,432 - (7,432) - - - 4,000

Exercise of debenture warrants 18,000 6,892 (2,392) - - - - 4,500

Exercise of warrants 1,489,693 700,444 (149,543) - - - - 550,901

Net loss for the period - - - - - - (2,647,795) (2,647,795)

June 30, 2014 55,237,553 12,245,422$ 1,153,578$ 1,120,448$ -$ -$ (11,029,890)$ 3,489,558$

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Imperus Technologies Corp. Notes to the Condensed Interim Consolidated Financial Statements June 30, 2015 (unaudited) (in Canadian dollars)

6

1. Nature of Operations Imperus Technologies Corp. ("Imperus" or "the Company") was incorporated under the British Columbia Corporations Act on February 9, 2011 as Wedona Capital Inc. (“WCI”). The Company was incorporated as a "Capital Pool Corporation" ("CPC"), as this term is defined in the policies of the TSX Venture Exchange (the "Exchange"). On November 7, 2013 the Company completed a Qualifying Transaction as this term is defined in the policies of the Exchange when it acquired 100% of the issued and outstanding shares of ISIS Lab Inc. (“ILI”) under the terms of a reverse takeover transaction (the "RTO"). On November 13, 2013, the shares of the Company began trading on the Exchange under the symbol "LAB". On September 15, 2014, the Company changed its name to Imperus Technologies Corp. and on October 15, 2014 the Company was continued under the Ontario Business Corporation Act ("OBCA"). These condensed interim consolidated financial statements are the consolidated financial statements of Imperus Technologies Corp. and its subsidiary companies:

• Imperus Inc. (formerly Isis Lab Inc.) (“ILI”), incorporated in Ontario on July 28, 2010 • Tech Channel Corporation (“Tech”), incorporated in Panama on December 25, 2010 • Vast Studios Inc. (“Vast”), incorporated in Ontario and purchased by Imperus on July 22, 2014 • Imperus Technologies (Israel) 2014 Ltd. (“Imperus Israel”), incorporated by Imperus on December 20, 2014 • Diwip Inc. (“Diwip”), incorporated in Israel and purchased by Imperus on January 30, 2015

Imperus is a developer of Internet bingo software packages. Vast develops hidden object computer games. Diwip develops and sells social casino games. Tech provides marketing and 24/7 telephone support services to the Company’s customers. The Company's head office is 65 Queen Street, 7

th Floor, Toronto, Ontario, M5H 2M5.

These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on August 31, 2015. 2. Statement of Compliance and Basis of Presentation Statement of Compliance These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”), under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), following the same accounting policies and methods of computation as the audited consolidated financial statements for the fiscal year ended December 31, 2014. The condensed interim consolidated financial statements do not include all of the disclosures included in the annual audited consolidated financial statements and the notes thereto included in the Company’s annual report for the year ended December 31, 2014. Basis of Measurement These condensed interim consolidated financial statements are prepared on the historical cost basis except for certain financial instruments, which have been measured at fair value. Principles of Consolidation

These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Imperus Inc., Vast Studios Inc., Imperus Technologies (Israel) 2014 Ltd., Diwip Ltd. and Tech Channel Corporation from their respective dates of acquisition. All inter-company balances and transactions have been eliminated.


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2. Statement of Compliance and Basis of Presentation (continued) Accounting for Business Combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of acquisition-date fair values of the assets transferred and liabilities assumed by the Company, liabilities incurred by the Company to former owners of the acquiree in exchange for control of the acquiree. Acquisition-related costs are recognized in the statement of operations as incurred. At the acquisition date, the identifiable assets acquired, liabilities and contingent liabilities assumed are recognized at their fair values, except for deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements, which are recognized and measured in accordance with IAS 12 Income tax and IAS 19 Employee Benefits respectively. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in the statement of operations as a bargain purchase gain. Functional and Presentation Currency The presentation currency of the Company is the Canadian dollar. The functional currency of the Company and its subsidiaries, except for Diwip, is the Canadian dollar. The functional currency of Diwip is the US dollar. Transactions denominated in foreign currencies are translated into the Canadian dollar as follows: - Foreign currency transactions are recognized initially at the exchange rate at the date of the transaction; - Monetary assets and liabilities are translated at the rates of exchange at the end of the reporting period; - Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date; - Revenue and expenses are translated at the average exchange rates throughout the reporting period, which approximates actual rates, except depreciation and amortization, which are translated at the rates of exchange applicable to the related assets, and share-based compensation expense, which is translated at the rates of exchange applicable at the date of grant of the share-based compensation; and - Exchange gains and losses on translation are included in the statement of loss and comprehensive loss. For the purpose of presenting these consolidated financial statements, the assets and liabilities of Diwip are translated to Canadian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. All resulting currency translation gains or losses from translating the financial statements from the functional currency to the presentation currency are recorded in other comprehensive loss in the consolidated statement of loss and comprehensive loss. In preparing the financial statements of the individual entity, transactions in currencies other than the entity's functional currency (foreign currencies) are translated to the functional currency of each entity at the exchange rate in existence at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated at the exchange rates at that date. Non-monetary items which are measured using historical cost in a foreign currency are retranslated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.


8

3. Significant Accounting Judgments, Estimates and Assumptions The preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates are subject to measurement uncertainty. Actual results could differ from these estimates. The effect of changes in such estimates on the financial statements in future periods could be significant. Accounts specifically affected by estimates in these condensed interim consolidated financial statements are: Useful lives and residual values of intangibles: Management estimates the useful lives and residual values to calculate amortization expense using the declining balance method. Significant judgment is involved in the determination of useful life for the computation of amortization of intangible assets. No assurance can be given that the actual useful lives will not differ significantly from current assumptions. Allowance for impairment of note receivable: Management assesses the credit worthiness and the financial position of the borrower to arrive at and provide for an allowance for impairment of receivables. Estimated impairment of long term assets: Management reviews long term assets’ residual values and useful lives at the end of each reporting period and writes down the asset’s carrying amount to its estimated recoverable amount if the carrying amount is greater. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment loss is recognized in the consolidated statement of loss and comprehensive loss. The assessment of fair value requires the use of estimates and assumptions related to future operating performance and discount rates. Business Combinations: In a business combination: substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of contingent consideration, if applicable. If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent external valuation expert may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. In certain circumstances where estimates have been made, the companies may obtain third-party valuations of certain assets, which could result in further refinement of the fair-value allocation of certain purchase prices and accounting adjustments. 4. Significant Accounting Policies The Company’s accounting policies are set out in the Company’s annual consolidated financial statements for the year ended December 31, 2014 and were consistently applied to all the periods presented unless otherwise noted below. a) Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Diwip, Imperus Israel, Vast, ILI and Tech. All inter-company balances and transactions have been eliminated.


9

4. Significant Accounting Policies (continued) (b) Employee benefits Employees of the Company’s Isreali subsidiary, Diwip, are eligible to receive benefits under a termination benefit plan, subject to minimum participation requirements of Isreali law. The plan is funded through insurance policies and pension funds. Actuarial gains and losses are immediately recognized in other comprehensive income. (c) Future accounting policies IFRS 9 Financial Instruments is part of the IASB's wider project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. The standard is effective for annual periods beginning on or after January 1, 2018. The Company intends to adopt the standard on its effective date but has yet to assess the full impact. IFRS 15 - Revenue from Contracts with Customers ("IFRS 15") addresses how and when entities recognize revenue, as well as requires more detailed and relevant disclosures. IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programs, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue - Barter Transactions Involving Advertising Services. The Section provides a single, principles based five-step model to be applied to all contracts with customers, with certain exceptions. The standard is effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. The Company intends to adopt the new Standard on its effective date and has yet to consider the impact on its financial reporting. 5. Business Acquisitions Diwip Ltd. On January 30, 2015, the Company completed the purchase of the shares of Diwip Ltd. pursuant to the acquisition agreement dated October 14, 2014. Diwip, a private software company based in Tel Aviv, Israel, is a developer of social and mobile gaming for PC, Mac, iOS and Android platforms. Pursuant to the agreement, Imperus acquired, through a wholly-owned subsidiary, all of the issued and outstanding shares of Diwip (collectively, the "Purchased Shares"). As consideration for the Purchased Shares, Imperus paid the Diwip Principals a closing purchase price of US$50,000,000 (C$66,758,306) (the "Closing Purchase Price"). The Closing Purchase Price was subject to a working capital adjustment of US$423,479 (C$527,273). The Company may also pay as a contingent earn-out payment up to US$50,000,000 (the "Earn-out Payments"), as further described below. The Closing Purchase Price paid on the closing of the acquisition, was paid as follows: (a) US$39,661,217 (C$50,437,169) was paid in cash and (b) US$9,913,304 (C$12,345,545) was satisfied by the issuance of 30,558,280 common shares of Imperus ("Common Shares"). These common shares were valued at $15,890,306 based on the closing share price of $0.52 on January 30, 2015.


10

5. Business Acquisitions (continued) In addition to the Closing Purchase Price, as further consideration for the Purchased Shares, the Diwip Principals are entitled to Earn-out Payments upon the achievement of certain financial milestones, as follows: (a) a payment of US$12,500,000, payable within 60 days after the first anniversary of the closing date, which amount may be increased to US$25,000,000 or decreased to US$0, should an agreed upon multiple of annualized revenue and annualized EBITDA of Diwip in the first year after closing be above or below a target milestone; and (b) a payment of US$12,500,000, payable within 60 days after the second anniversary of the closing date, which amount may be increased to US$25,000,000 or decreased to US$0, should an agreed upon multiple of annualized revenue and annualized EBITDA of Diwip in the second year after closing be above or below a target milestone. All Earn-out Payments will be paid in cash and Common Shares at a 4:1 ratio. The Common Shares issuable in respect of the Earn-out Payments are calculated at a price per Common Share that is equal to the greater of the 30 day VWAP ending on the third trading day prior to the applicable payment of the earn-out, and CDN$0.53 (the "Minimum Issue Price") (or such higher price as may be required by the Exchange). In the event that Imperus does not pay all or any portion of the Earn-out Payments to a Diwip Principal when due under the terms of the Agreement (the "Earn-out Due Date"), such unpaid amount will be deemed to be extended as a loan by such Diwip Principal to Imperus. The outstanding amount under such loan will bear interest at the rate of 20% per annum until repaid, with a term expiring 60 days after the Earn-out Due Date (or earlier in certain circumstances). After such 60 day period (or in certain circumstances earlier), such Diwip Principal may initiate collection proceedings of the amount that is due (plus accrued interest) and may, at its option, for a period of 18 months thereafter, convert any outstanding principal and interest under such loan into Common Shares at a conversion price equal to the greater of the 30 day VWAP ending three trading days prior to the conversion and the Minimum Issue Price (or such higher price as may be required by the Exchange). The Company estimated the fair value of the Earn-out payments to be $24,285,937 on the closing date. A discount rate of 20% was used to estimate the fair value. This value has been adjusted as at June 30, 2015 based on current estimates of future operations. In accordance with IFRS 3 Business Combinations, the acquisition was accounted for using the purchase method. The acquisition was financed through a combination of cash and shares issued from the treasury. The preliminary allocation of the purchase price to the estimated fair value of the net assets acquired is as follows: The net assets of Diwip received were as follows:

Purchase price:

Cash consideration paid 50,437,169$

Share consideration paid 15,890,306

Contingent consideration 24,285,937

Total purchase price 90,613,412

Fair Value of assets acquired and liabilities assumed:

Cash and short-term investments 1,566,154

Accounts receivable 1,340,279

Tax assets receivable 224,585

Equipment 110,362

Long-term accounts receivable 1,280

Deferred tax assets 643,880

Accounts payable and accrued liabilities (3,192,805)

Employee benefits liability (90,648)

Total net assets acquired 603,087

Unallocated purchase price 90,010,325$ The unallocated purchase price is mainly attributable to Diwip's software, assembled workforce, customer relationships and non-compete agreements. The customer relationships and non-compete agreements will be amortized over a period of seven years and three years, respectively.


11

5. Business Acquisitions (continued) If the acquisition had occurred on January 1, 2015, management estimated that the Company's consolidated revenue and consolidated loss from continuing operations would be $11,820,115 and $9,936,469 respectively, for the six months ended June 30, 2015. Management has determined these amounts based on internally prepared financial results obtained from the vendor. These pro-forma results reflect adjustments for depreciation and other costs associated with the Acquisition assuming the fair values used in the purchase price allocation occurred on January 1, 2015. These pro-forma results may not necessarily be indicative of actual results had the acquisition occurred on January 1, 2015. As of June 30, 2015 the allocation of the purchase consideration is based on preliminary estimates in regards to the fair value of the assets acquired and the contingent consideration and has not been finalized. The actual fair value of the contingent consideration may differ from the amount disclosed in the preliminary purchase price allocation and is subject to change. It is expected that the unallocated purchase price will be allocated between goodwill and intangibles upon completion of the valuation of the acquisition. Vast Studios Inc. As of June 30, 2015, the allocation of the purchase consideration is based on preliminary estimates in regards to the fair value of the assets acquired and the contingent consideration and has not been finalized. The actual fair value of the contingent consideration may differ from the amount disclosed in the preliminary purchase price allocation and is subject to change. It is expected that the unallocated purchase price will be allocated between goodwill and intangibles upon completion of the valuation of the acquisition. The unallocated purchase price of this acquisition remains as $1,128,278 as of June 30, 2015 (Note 10). 6. Prepaid expenses and other receivables

June 30, 2015 December 31, 2014

Prepaid interest 3,559,080$ -$

Harmonized sales tax and VAT receivable 117,034 105,499

Prepaid expenses and other receivables 269,930 404,192

3,946,044$ 509,691$ 7. Unbilled Revenue Unbilled revenue is the amount of unbilled revenue related to contracted software projects in progress at period end.


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8. Note Receivable

June 30, 2015 December 31, 2014

Balance, beginning of period 707,870$ 485,269$

Reimbursement - 191,476

Service and license fees charged 90,000 135,000

Accrued interest 26,927 67,422

Unrealized foreign exchange 35,613 (16,297)

Included in accounts receivable (90,000) (105,000)

Repayments - (50,000)

Impairment charge (770,410) -

Balance, end of period -$ 707,870$ During the year ended December 31, 2011, the Company agreed to lend funds to its customer Cladstone Limited (“Cladstone”) for an amount not exceeding an aggregate sum of 500,000 Great Britain Pounds in any 12 month period to support Cladstone’s daily operations. This agreement was subsequently terminated on September 12, 2013. The loan will become due upon demand of the Company at such time that Cladstone is in a position of making sufficient revenues to support its daily operations. The interest is calculated and accrued at an annual rate of 12%. Since the balance is not expected to be repaid within 12 months, it is classified as a long term asset. The Company also signed a software license agreement and a service agreement with Cladstone. The software license agreement grants Cladstone a non exclusive, non transferable license for a term of five years, from April 1, 2011. The fee will be calculated based on the number of users. The Company agreed to grant Cladstone a 24 month grace period on the fee. An amount of $15,000 and $30,000 was billed and recognized from the license agreement for the three and six months ended June 30, 2015 respectively (three and six months ended June 30, 2014: $15,000 and $30,000 respectively). The service agreement charges Cladstone a $10,000 monthly fee for a term of five years from April 2011. During the three and six months ended June 30, 2015, $30,000 and $60,000 respectively was recognized from the service agreement (three and six months ended June 30, 2014: $30,000 and $60,000 respectively). The Company assessed the amounts owing from Cladstone for impairment during the six months ended June 30, 2015 and has recognized an impairment charge of $240,000 related to the service and license fees accumulated in accounts receivable, as well as an impairment charge on the balance of the note receivable of $770,410. As such, a total amount of $1,010,410 has been recorded as an impairment charge on the condensed interim consolidated statements of loss and comprehensive loss for the three and six months ended June 30, 2015. 9. Equipment

December 31, 2014

Cost

Accumulated

depreciation Net Net

Vehicles 14,594$ (14,594)$ -$ 2,397$

Office equipment 108,554 (38,435) 70,119 48,488

Leasehold improvements 26,344 (4,430) 21,914 17,072

Computer equipment 189,510 (50,676) 138,834 91,565

339,002$ (108,135)$ 230,867$ 159,522$

June 30, 2015

Depreciation expense charged to the condensed interim consolidated statements of loss and comprehensive loss for the three and six months ended June 30, 2015 was $33,216 and $50,166 respectively (three and six months ended June 30, 2014: $3,201 and $6,391 respectively).


13

10. Unallocated Purchase Price The unallocated purchase price relates to the acquisitions of Vast Studios Inc. on July 22, 2014 and Diwip Ltd. on January 30, 2015 (Note 5).

June 30, 2015 December 31, 2014

Vast Studios Inc. 1,128,278$ 1,128,278$

Diwip Ltd. 90,010,325 -

91,138,603$ 1,128,278$ 11. Intangibles

June 30, 2015 December 31, 2014

Cost 4,494,087$ 3,962,567$

Accumulated amortization (1,908,284) (1,618,810)

Net book value 2,585,803$ 2,343,757$ Intangibles are the Company’s internally developed Internet bingo software with certain supporting features. The balance consists of the $1,020,000 initial value paid to the three developers at incorporation through the issuance of 7,045,363 common shares and additional direct costs incurred by the Company subsequently, mainly the salaries paid to developers. Amortization expense charged to net loss for the three and six months ended June 30, 2015 was $151,579 and $289,473 respectively (three and six months ended June 30, 2014: $128,806 and $245,205 respectively). 12. Accounts payable and accrued liabilities

June 30, 2015 December 31, 2014

Operations 1,484,051$ 60,659$

Corporate liabilities 1,244,877 1,607,752

Payroll liabilities 423,084 55,806

Acquisition liabilities 78,262 190,865

3,230,274$ 1,915,082$ 13. Bank loan On closing of the Vast Acquisition, Vast obtained an extension of its bank credit facilities in the aggregate principal amount of $500,000, comprised of a demand facility of $200,000 and a term facility of $300,000. As at June 30, 2015 the demand facility was $nil (December 31, 2014 - $78,250) and the term facility was $nil (December 31, 2014 - $nil).


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14. Debentures payable

June 30, 2015 December 31, 2014

Series 2014-A 12% Debenture -$ 1,020,468$

Series 2014-B 12% Debenture 864,319 805,486

Series 2014-C 20% Debenture - 675,783

864,319$ 2,501,737$ Debentures are carried at amortized cost using an effective interest rate method with note discount and transaction costs netted against the principal. On June 24, 2014 the Company issued redeemable, non-convertible, unsecured Series 2014-A debentures in the amount of $1,000,000. Under the terms of the debentures, the Company paid 12% interest per annum calculated and payable on a quarterly basis except, if the debentures are repaid within four months of being issued, the Company will pay a minimum of four months interest. In addition, the Company agreed to issue 145,454 common shares that are 8% of the principal amount of the debenture with a fair market value of $80,000.These debentures had a maturity date of July 23, 2015 and were redeemable at any time at the discretion of the Company upon two days written notice. The full amount was repaid during the six months ended June 30, 2015. On August 7, 2014 the Company issued redeemable, non-convertible, unsecured Series 2014-B debentures in the amount of $861,000. Under the terms of the debentures, the Company is paying 12% interest per annum calculated and payable on a quarterly basis except, if the debentures are repaid within four months of being issued, the Company will pay a minimum of four months interest. In addition, the Company agreed to issue 167,895 bonus common shares with a fair market value of $68,880, a cash commission of $51,660, and 51,660 broker warrants with a value of $7,236. These debentures will mature and be due and payable on September 7, 2015. On October 31, 2014 the Company issued $700,000 principal amount of unsecured nonconvertible debenture (the "Series C Debenture") on a non-brokered, private placement basis. The debentures had a term expiring on the earlier of (i) January 31, 2015, (ii) the date upon which the Company completes the Diwip acquisition, and (iii) the date upon which the Company completes a debt and/or equity financing for minimum gross proceeds of $5,000,000. Under the terms of the debentures, the Company will pay 20% interest per annum, which was prepaid on the issuance of the Debenture assuming a January 31, 2015 maturity. In addition, the Company agreed to issue 100,000 Common shares to the debenture holders. The full amount was repaid during the six months ended June 30, 2015. The Company has recorded $34,972 and $140,376 of accretion and interest on the debentures during the three and six months ended June 30, 2015 respectively (three and six months ended June 30, 2014: $1,249 and $1,249 respectively). 15. Long-term debt Long-term debt is composed of earn-outs payable to former shareholders of Vast Studios Inc. and Diwip Ltd.

June 30, 2015 December 31, 2014

Vast earn-out 102,652$ 254,737$

Diwip earn-out 26,667,203 -

26,769,855$ 254,737$

Current portion 6,922,181$ -$

Long-term portion 19,847,674$ 254,737$


15

15. Long-term debt (continued) As additional consideration for the Diwip acquisition, the Company has agreed to pay the Diwip Vendors earn-out payments over the first two years following the acquisition closing date of up to an aggregate of US$50,000,000 (the "Earnout Payments"). The amounts payable pursuant to the Earnout Payments will depend on whether the Earnout Result (as hereafter defined) in each of the first two years following closing is at, above or below certain agreed-upon targets, as described in more detail below. The "Earnout Result" means, with respect to any of the First Earnout Period or the Second Earnout Period, as the case may be, the sum of: (i) 1.25 times Annualized EBITDA (as defined in the Diwip acquisition agreement) of such Earnout Period and (ii) 3 times Annualized Revenue (as defined in the Diwip acquisition agreement) of such Earnout Period. The terms Annualized EBITDA and Annualized Revenue have defined meanings in the Diwip acquisition agreement, which definitions specifically include or exclude certain revenue, income or expense items, and as such, these definitions may not necessarily be directly comparable to the meanings of EBITDA or revenue used by other companies or under IFRS. Readers are cautioned to refer to the specific definitions set out in the Diwip Acquisition Agreement. All Earnout Payments will be paid in cash and Common Shares at a 4:1 ratio. The Common Shares issuable in respect of the Earnout Payments are issuable based on the number of Common Shares (rounded to the nearest whole share) as equal to the Canadian dollar equivalent of such amount preceding the date of the payment of the Earnout Payments divided by the greater of (a) the 30 day VWAP of the Common Shares on the TSXV ending on the third trading day prior to the applicable date of the payment of the earnout; and (b) C$0.53 (or such higher price as may be required by the TSXV). Management has assessed the likelihood of making the Earnout Payments and has adjusted the estimated amounts that the Company anticipates paying the vendors for both the Vast Acquisition and Diwip Acquisition. A 20% annual interest rate was used to discount the future estimated cashflows to determine the carrying value of each liability. During the three and six months ended June 30, 2015, $1,913,398 and $2,587,511 was recorded as changes in fair value of long-term debt respectively (three and six months ended June 30, 2014: $nil and $nil respectively). 16. Loan payable

June 30, 2015 December 31, 2014

Third Eye Capital 42,350,975$ -$

Current portion 1,873,500$ -$

Long-term portion 40,477,475$ -$ On January 30, 2015, in conjunction with, and as a condition of completion of, the Diwip Acquisition, the Company completed a secured debt financing pursuant to a credit agreement dated January 30, 2015 (the "Credit Agreement") among the Company, as borrower, certain subsidiaries of the Company, as credit parties, a syndicate of lenders (the "Lenders"), and the Lenders' administrative agent, Third Eye Capital Company ("TEC"). In accordance with the Credit Agreement, the Lenders advanced to the Company a senior secured Term Loan Facility in the principal amount of US$40,000,000 (the "Term Loan Facility"). The Company used the net amount advanced to it under the Term Loan Facility to pay a portion of the Closing Portion of the Purchase Price (as hereafter defined) under the Diwip Acquisition (Note 5).


16

16. Loan payable (continued) The Term Loan Facility has a term of three years, subject to acceleration by TEC on certain events of default and subject to the Company's right to repay the Term Loan Facility after the first anniversary upon three months prior notice, and bears interest at 12% per annum, calculated and payable monthly in arrears. Interest for the first year of the term was pre-paid in advance at closing pursuant to the terms of the Credit Agreement. If the Term Loan Facility is outstanding on January 30, 2017, it will be subject to a US$1,000,000 maintenance fee payable to TEC, on behalf of the Lenders. Starting April 30, 2016, the Company will be required to repay US$1,500,000 per quarter of the principal outstanding under the Term Loan Facility. This portion is recognized a the current portion of the loan payable. As well, the Company is required to make certain principal repayments in certain other circumstances prior to maturity. The Term Loan Facility is secured by, among other things: (i) a first priority security agreement in favour of TEC, on behalf of the Lenders, on all of the present and future real and personal property of the Company and its subsidiaries; (ii) guarantees provided by certain subsidiaries of the Company; (iii) source code escrow arrangements for current and future Source Code of the Company and its subsidiaries; (iv) the assignment of certain third party licensing and revenue sharing agreements; (v) deposit account control agreements over certain bank accounts of the Company and its subsidiaries; and (vi) a pledge of the shares of each of the subsidiaries of the Company. The Term Loan is subject to various information, affirmative and financial covenants. As at June 30, 2015, the Company did not meet certain financial covenants. The lender has waived the breach for a waiver fee of US$100,000 for certain covenants. The loan has not been called as at June 30, 2015. The Company paid to TEC, on behalf of the Lenders, a one-time placement fee of US$800,000, a one-time commitment fee of US$600,000 and a one-time closing fee of US$600,000 for the Term Loan. The Company has also entered into a letter agreement with a third party company assisting with the arrangement of the Term Loan, and paid the third party a cash fee equal to 2% of the gross amount advanced under the Term Loan. The loan payable was recognized initially at fair value net of direct attributable transactions costs. Subsequent to initial recognition, it is measured at amortized cost using the effective annual interest rate of 22.81%. 17. Employee benefits payable Under Israeli employment law, the Company is liable for severance pay when employees leave Diwip. At June 30, 2015 the Company determined an actuarial calculation of $91,834 as a liability under the terms of the employment law. 18. Share Capital Authorized Unlimited common shares without par value. Issued and outstanding shares

Number of shares Amount

Balance, December 31, 2014 58,856,323 13,840,778$

Issuance of shares (i) 70,644,500 24,725,575

Cost of issue (i) - (2,722,277)

Issuance of warrants on financing (i) - (6,273,231)

Issuance of shares related to Vast acquisition (ii) 106,608 38,912

Issuance of shares related to Diwip acquisition (iii) 30,558,280 15,890,306

Exercise of warrants (iv) 757,670 430,707

Warrants issued on exercise of broker options (v) - (53,365)

Balance, June 30, 2015 160,923,381 45,877,405$


17

18. Share Capital (continued) (i) On January 28, 2015, the Company completed a brokered private placement of 70,644,500 subscription receipts at $0.35 per subscription receipt for aggregate gross proceeds of $24,725,575. The subscription receipts were automatically converted into units of one common share and one-half of one common share purchase warrant. The warrants were valued at $6,273,231. Costs associated with the transaction were $1,643,535 in cash payments and 4,238,670 agent options valued at $1,078,742 issued as part of the transaction. (ii) On July 21, 2014, the Company completed the purchase of the shares of Vast Studios Inc. pursuant to the acquisition agreement dated July 21, 2014. In accordance with the acquisition agreement, on January 21, 2015, the Company agreed to pay the Sellers an amount of $50,000 by the issuance of 106,608 common shares of the Company at a value of $0.37 per share which represents fair market value of $38,912 on the date. (iii) On January 30, 2015, the Company completed the purchase of the shares of Diwip Ltd. pursuant to the acquisition agreement dated October 14, 2015 (the "Acquisition"). In accordance with the acquisition agreement, the Company agreed to pay the Sellers an amount of US$10,000,000 (C$15,890,306) by the issuance of 30,558,280 common shares of the Company at a value of $0.52 per share which represents fair market value of $15,890,306 on the date. (iv) During the six months ended June 30, 2015, 757,670 warrants were exercised for cash proceeds of $285,514. The fair value of $145,193 related to the warrants exercised was reclassified from warrants to share capital. (v) During the six months ended June 30, 2015, 211,460 warrants were issued upon the exercise of broker warrants recorded at a fair value of $53,365. During the period from incorporation on February 9, 2011 to March 31, 2011, WCI issued 2,000,000 common shares at $0.05 per share for gross proceeds of $100,000. The 2,000,000 common shares were to be held in escrow until completion of the Company's QT. Upon completion of the Company's QT on November 12, 2013 the shares are to be released on a staged basis, with 10% to be released on the issuance of a final exchange bulletin by the TSX-V, and 15% to be released every six months thereafter for a period of thirty-six months. On November 7, 2013, WCI completed a Concurrent Financing by the issuance of 23,000,000 units. Each unit, issued at a price of $0.30 per unit, consisted of one common share and one half common share purchase warrant. The 11,500,000 share purchase warrants issued were valued at $1,047,000. Under the terms of the offering 13,527,788 common shares and 30,000 warrants were placed into escrow. During the six months ended June 30, 2015, 2,329,168 shares were released from escrow (six months ended June 30, 2014: 2,329,168 released). Schedule of release of shares from escrow:

Shares

November 12, 2015 2,329,168

May 12, 2016 2,329,168

November 12, 2016 2,329,168

6,987,504


18

19. Warrants Warrant activity during the six months ended June 30, 2015 is detailed as follows:

Number of

warrants Value

Weighted

Average

Exercise Price

December 31, 2014 11,100,789 1,111,113$ $0.440

Warrants issued related to equity financing 35,322,250 6,273,231 $0.550

Warrants issued related to debt financing 20,000,000 4,764,000 $0.385

Warrants issued to agent 4,238,670 1,078,742 $0.350

Warrants issued on exercise of agent warrants 211,460 53,365 $0.455

Exercise of debenture warrants (80,000) (10,632) $0.300

Exercise of warrants (254,750) (29,721) $0.450

Exercise of agent warrants (422,920) (104,840) $0.347

June 30, 2015 70,115,499 13,135,258$ $0.475 During the six months ended June 30, 2015, the Company issued 35,322,250 warrants as part of its equity financing. These warrants are exercisable at a price of $0.55 per share for a period of 36 months. The warrants were valued at $6,273,231 using the Black-Scholes option pricing model with the following assumptions: expected life of one year, risk-free rate of 1.00%, expected dividend yield of 0% and expected volatility of 92.5%. During the six months ended June 30, 2015, the Company issued 20,000,000 warrants as part of its debt financing. These warrants are exercisable at a price of $0.385 per share for a period of 36 months. The warrants were valued at $4,764,000 using the Black-Scholes option pricing model with the following assumptions: expected life of one year, risk-free rate of 1.00%, expected dividend yield of 0% and expected volatility of 92.5%. During the six months ended June 30, 2015, the Company issued 4,238,670 agent warrants as part of its equity financing. These warrants are exercisable at a price of $0.35 per share for a period of 36 months. The warrants were valued at $1,078,742 using the Black-Scholes option-pricing model with the following assumptions: expected life of one year, risk-free rate of 1.00%, expected dividend yield of 0% and expected volatility of 92.5%. During the six months ended June 30, 2015, 422,920 agent warrants were exercised which resulted in the issuance of 211,460 warrants. These warrants were valued at $53,365 using the Black-Scholes option pricing model with the following assumptions: expected life of less than one year, risk-free rate ranging from 0.48% to 0.66%, expected dividend yield of 0% and expected volatility ranging from 91% to 108%. As at June 30, 2015, the following warrants remain outstanding:

Number of

warrants Expiry date

Exercise

price Value

163,000 November 7, 2015 $0.300 21,663$

9,375,167 November 7, 2015 $0.450 851,357

793,170 November 7, 2015 $0.300 105,215

371,582 November 7, 2015 $0.450 85,615

51,660 November 12, 2016 $0.410 7,236

35,322,250 January 28, 2018 $0.550 6,273,231

3,838,670 January 28, 2018 $0.350 976,941

200,000 January 28, 2018 $0.550 50,000

20,000,000 January 30, 2018 $0.385 4,764,000

70,115,499 $0.475 13,135,258$


19

20. Stock options The stock option plan (the "Plan") is administered by the Board of Directors of the Company which establishes the exercise prices, vesting conditions and expiry date of the options. The number of common shares reserved under the Plan at June 30, 2015 and December 31, 2014 is 16,092,338 and 5,885,623 respectively.

Number of

options Value

Weighted

Average

Exercise Price

December 31, 2014 4,941,747 1,158,480$ $0.46

Granted 11,110,000 2,443,398 $0.38

Expired/cancelled (700,000) (239,688) $0.51

June 30, 2015 15,351,747 3,362,190$ $0.40 During the three and six months ended June 30, 2015, the Company granted 11,110,000 stock options to directors, officers, consultants and employees of the Company. Of these options, 8,860,000 vest immediately upon grant, 1,000,000 vest in quarterly instalments starting one year from the date of grant, 750,000 vest one year from the date of grant, and 500,000 vest when the Company’s share price trades at a specified price. Other options granted in previous years also vested during the quarter. As a result, $2,428,881 and $2,443,398 in stock-based compensation expense was recorded to the condensed interim consolidated statements of loss and comprehensive loss for the three and six months ended June 30, 2015 respectively (three and six months ended June 30, 2014: $112,999 and $371,692 respectively. The weighted average remaining contractual life of the outstanding options is 4.08 years (December 31, 2014: 3.69 years). As at June 30, 2015, the following stock options remain outstanding:

Grant date

Number of

options

outstanding

Number of

options vested Expiry date

Exercise

price Value

Expected

life

Risk-free

interest

rate

Expected

dividend

yield

Expected

volatility

January 21, 2014 200,000 200,000 August 6, 2015 $0.40 60,540$ 5 years 1.69% 0% 89%

December 2, 2013 200,000 200,000 August 17, 2015 $0.40 44,840 5 years 1.76% 0% 100%

January 21, 2014 300,000 300,000 August 20, 2015 $0.40 90,810 5 years 1.69% 0% 89%



December 2, 2013 100,000 100,000 December 2, 2015 $0.40 16,930 2 years 1.11% 0% 100%



June 17, 2014 50,000 50,000 December 31, 2015 $0.38 19,175 5 years 1.59% 0% 89%


December 2, 2013 2,586,747 2,586,747 December 2, 2018 $0.40 583,570 5 years 1.76% 0% 100%

January 21, 2014 55,000 55,000 January 21, 2019 $0.40 16,649 5 years 1.69% 0% 89%

April 7, 2015 10,710,000 8,460,000 April 7, 2020 $0.38 2,784,600 5 years 0.76% 0% 91%

April 16, 2015 400,000 400,000 April 16, 2020 $0.48 128,000 5 years 0.80% 0% 90%

15,351,747 13,101,747 $0.40

BLACK-SCHOLES INPUTS


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21. Financial Instruments Fair Value Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. As of June 30, 2015 and December 31, 2014, the fair value of the Company's note receivable is not determinable given the circumstances described in credit risk below. The carrying value is presented in the condensed interim consolidated statement of financial position. The fair value of all the Company's other financial instruments approximate the carrying value, due to their short-term nature. Financial Risk Factors The Company is exposed in varying degrees to a variety of financial instrument related risks: Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is in its note receivable (note 8) since it is due from Cladstone, a start-up company. In an effort to mitigate this risk, management actively manages and monitors its receivables. Liquidity risk The Company manages its liquidity risk through the management of its capital which incorporates the continuous monitoring of actual and projected cash flows to ensure that it has sufficient liquidity to meet its operating commitments without incurring unacceptable losses or risking damage to the Company’s reputation. The Company has reported working capital of $2,826,276 as at June 30, 2015 (December 31, 2014: a working capital deficiency of $3,270,051). Foreign currency risk The Company's functional currency is the Canadian dollar. The Company holds a note receivable denominated in U.K. pound sterling (note 8) and also funds certain operations, and administrative expenses in the Isle of Man and in Panama on a cash call basis using the U.K. pound sterling and US dollar converted from its Canadian dollar bank accounts held in Canada. The Company’s Diwip subsidiary operates in both New Isreali Shekels (NIS) and US dollars. As well, the Company’s earn-out liability with respect to the Diwip acquisition and the Company’s debt facility are both denominated in US dollars. The Company does not hedge its foreign exchange risk. As at June 30, 2015 a plus or minus 10% change in foreign exchange rates applied to the financial instruments held at the end of the reporting period would affect net loss or gain by approximately $6.6 million.


21

22. Related Party Transactions and Balances Related parties include the Board of Directors, key management personnel, close family members and enterprises which are controlled by these individuals as well as certain persons performing similar functions. Remuneration of key management personnel of the Company for the six months ended June 30, 2015 and 2014 were as follows:

June 30, 2015 June 30, 2014

Capitalized development costs 55,800$ 55,800$

Salaries and related benefits 378,702 84,000

Directors fees 150,000 -

Subcontractor expense 433,420 130,200

Stock-based compensation 1,292,089 -

2,310,011$ 270,000$

Six months ended

Included in accounts payable and accrued liabilities at June 30, 2015 is $262,975 (December 31, 2014 - $nil) owing to these related parties. 23. Commitments The Company is party to certain management contracts. These contracts require that additional payments of up to $4,100,000 be made upon the occurrence of certain events such as a change of control. As the likelihood of these events taking place is uncertain and it is not probable that there will be any outflow of resources to settle the commitment, the contingent payments have not been reflected in these condensed interim consolidated financial statements. Minimum commitments remaining under these contracts were approximately $1,500,000 all due within one year. The Company has total future financial commitments under its office operating leases in the amount of $1,648,232 over the next five years.

condensed interim consolidated financial …august 31, 2015 . imperus technologies corp. 2 see...

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